MANAMA: With signs of optimism coming back to the global financial markets, Bahrain is cautiously optimistic about the outlook for its financial sector in 2010, the head of the country’s central bank said on Monday.
Rasheed Al-Maraj, governor of the Central Bank of Bahrain (CBB), said any projection about the future growth would be taken as “speculation” by many within the financial industry. He said that given the track record of Bahrain’s financial sector he was optimistic and hopeful about a good year.
The governor said the businesses in Bahrain were coming back to normal after having witnessed unsustainable high levels of growth in the past couple of years.
“We are part of the global financial community and the recovery seen at the international level is fragile. However, the indicators for growth are positive and we should be optimistic,” he added.
Al-Maraj, who was keynote speaker at a seminar on Bahrain and Luxembourg aimed at exploring possible cooperation between the two financial centers, also assured that inflation would remain within the comfortable levels. “Bahrain recorded the lowest inflation levels while some other regional countries faced the record levels of inflation last year and we don’t foresee any reason about growing inflation in the first quarter of this year,” he said.
“The economies of Bahrain and Luxembourg have many similarities. Both act as financial hubs serving a wider economic region. In Bahrain’s case, this region is the Middle East and North Africa, including the Gulf. In consequence, the combined assets of our financial industry represent several multiples of the size of our economy,” he said.
“Bahrain has concentrated on developing banking industry, including the wholesale banks that provide project finance throughout the wider MENA region. However, in recent years, in line with the Vision 2030 Plan, Bahrain has sought to diversify its financial sector,” the governor said.
As of November 2009, there were 2,610 authorized funds established in Bahrain managing assets of over $9 billion. “Bahrain is seeking to develop the fund industry further and we expect it to grow rapidly in the coming years,” Al-Maraj said.
“The financial crisis has caused many financial centers to review their development strategies. Bahrain is no exception to this trend, even though the crisis has had only a modest impact on our financial system. Throughout 2008 and 2009, our financial markets continued to function normally and the government of Bahrain did not consider it necessary to take extraordinary measures, such as recapitalization of banks and providing blanket guarantees that had been adopted in other parts of the world,” the governor said.
He said although Bahrain needed to place two wholesale banks into administration in 2009, these events did not have a spillover effect to the wider financial system.